THE WEEK AHEAD: US MID-TERMS; SQ, MRO, ROKU, ATVI, HTZ, YELP
Unless you've been living under a rock, you'll know that Tuesday is the U.S.'s mid-term elections. Polls will be open throughout the New York session and won't close until we're well into the Asian with polls closing on the East Coast first and then gradually progressing west through time zones. Actual results aren't likely to be known until at least 9 p.m. or so CST, so if you're going to play, you're potentially in for a long night. The only instrument probably worth looking at from a liquidity/volume standpoint for scalping around the time of election results is the E-mini S&P futures (or a corresponding proxy) and/or futures options, which is why I've posted a marked-up /ES chart here, which identifies fairly transparent, large time-frame horizontal support/resistance areas, so that when you drill down into lower time frames, you'll have those for context. Naturally, this is not as big of a deal as the general elections (if you recall, a really wild ride that was basically over by NY open), but may present some good scalping opportunities. On Tuesday night after NY close, I'll drill down a little more in time and mark up the chart a little further ... .
Aside from the elections, we've got some earnings on tap, too: OXY (96/34) and MYL (89/48) announce earnings on Monday after market close; LLY (82/29) and CVS (70/35) on Tuesday before market open; SQ (83/73), MRO (72/51), and ROKU (69/96) on Wednesday after market close; ATVI (85/46), DIS (73/26), HTZ (89/96), and YELP (83/72) on Thursday after market close. My preference in single name is for underlyings with a rank >70 and a 30-day >50, so I would lean toward playing SQ, MRO, ROKU, ATVI, HTZ, and/or YELP as volatility contraction plays. This is particularly nice here, since those all occur after the elections, which will allow the broader market to sort itself out first.
On the exchange-traded fund front: USO (100/32), XOP (70/37), EEM (73/26), IWM (65/24), and QQQ (62/26) round out the top implied volatility rank exchange-traded funds on my list.
Since I'm already in most of the exchange-traded funds (although I don't have any RUT on): CAT (78/36) already announced earnings, but still has some volatility left in it, as does NFLX (69/53), so I could see selling in a little premium in those if the post-election market just gives me nothing better to do ... .
Aside from the elections, we've got some earnings on tap, too: OXY (96/34) and MYL (89/48) announce earnings on Monday after market close; LLY (82/29) and CVS (70/35) on Tuesday before market open; SQ (83/73), MRO (72/51), and ROKU (69/96) on Wednesday after market close; ATVI (85/46), DIS (73/26), HTZ (89/96), and YELP (83/72) on Thursday after market close. My preference in single name is for underlyings with a rank >70 and a 30-day >50, so I would lean toward playing SQ, MRO, ROKU, ATVI, HTZ, and/or YELP as volatility contraction plays. This is particularly nice here, since those all occur after the elections, which will allow the broader market to sort itself out first.
On the exchange-traded fund front: USO (100/32), XOP (70/37), EEM (73/26), IWM (65/24), and QQQ (62/26) round out the top implied volatility rank exchange-traded funds on my list.
Since I'm already in most of the exchange-traded funds (although I don't have any RUT on): CAT (78/36) already announced earnings, but still has some volatility left in it, as does NFLX (69/53), so I could see selling in a little premium in those if the post-election market just gives me nothing better to do ... .